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A court has granted the US government the right to seize a piece of prime New York real estate part-owned by an Iranian charity due to its alleged links with the Tehran regime.

The jury agreed that Washington can seize the New York-based tower block that is 60 percent owned by the Alavi Foundation in the largest terrorism-related civil forfeiture case in US history.

Prosecutors claims that the Alavi Foundation - which donates money for Persian-language courses, health centres and universities - is tied to the Tehran regime through its partnership with the Assa Corporation.

The Assa Corporation has been described by The New York Times as a "shell company for an Iranian state-controlled bank" and owns the remaining 40 percent of the Fifth Avenue skyscraper.

The prosecution team say that this relationship has enabled "money laundering" on behalf of the Iranian government, which has been under US sanctions since 1995.

"In this trial, 650 Fifth Avenue's secret was laid bare for all to see," Joon H. Kim, the acting United States attorney for the Southern District of New York, said according to The New York Times.

"The owners of 650 Fifth Avenue gave the Iranian government a critical foothold in the very heart of Manhattan through which Iran successfully circumvented US economic sanctions."

The 36-floor skyscraper has been described as "one of Manhattan's hottest properties" by the New York Post and the US government believes it can make $1 billion from its sale which will go to terror victims.

Washington accuses Iran of links to terror groups that have killed American citizens, including the 9/11 hijackers, and is seeking damages from Tehran.

Iran vehmently denies the US claims, while Alavi Foundation defence lawyers are expected to challenge the court's decision.